Moody’s prunes TouchTunes Music

Moody's Investors Service said it lowered TouchTunes Music Group, LLC's backed senior secured first-lien bank credit facilities consisting of a revolving credit facility due April 2027 and first-lien term loan due April 2029 to B3 from B1 after considering a planned $140 million incremental senior secured first lien term loan add-on. The agency also trimmed the corporate family rating to B3 from B2 and the probability of default rating to B3-PD from B2-PD.

TouchTunes will the add-on to pay a shareholder distribution of $84.5 million to private equity sponsor TA Associates, repay $52.5 million of the second-lien term loan and pay related transaction fees. In addition, the planned upsized revolving credit facility of $50 million, previously $40 million, will be undrawn at the close of the transaction.

“The downgrade reflects the substantial increase in TouchTunes' pro forma financial leverage to 6.8x from 5.7x in 2023 amid a slow growth economic environment. Moody's expects deleveraging through EBITDA growth in 2024, supported by growth in mobile sales and the full effect of the revenue share increases. However, deleveraging efforts could be constrained by incremental debt-financed acquisitions or shareholder distributions,” the agency said in a press release.

The outlook is stable.

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